Paul Smith, the fashion label famed for its use of colourful stripes, is to
try to crack the Chinese market – for the second time.

The move is the latest proof that many British luxury good manufacturers are relying on the burgeoning Chinese middle class to fuel their profit growth.

The fashion label is to open 24 shops in China, with a flagship 5,000 square foot store in Shanghai. The roll-out will be managed in partnership with ImagineX, a Hong-Kong based company.

Paul Smith pulled out of China in 2007 due to undisclosed losses. The following year, founder Sir Paul Smith said the Chinese market was “extremely dangerous” as a result of very high rents and the majority of the population only wanted “clothes to cover their bodies”.

However, he will join a growing list of companies pinning their hopes on the seemingly insatiable desire of Chinese consumers for upmarket fashion and accessories, despite fears that the Chinese economy has peaked.

Last month Burberry said that China had become its biggest market after America, with one of its bestselling items in the country being an exotic alligator iPad case, costing £2,495. A McKinsey report last year projected that Chinese luxury consumption would grow 18pc annually and account for 20pc of the global market by 2015.

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The company already has a large Asian presence with stores in Hong Kong, Singapore, Taiwan, the Philippines, Korea and Japan. Last year it reported a 31pc jump in profits, fuelled by its international customers, while sales in the UK ticked up by just 5pc.

Sir Paul, who started the business from his mother’s front room in the 1960s, is thought to be the highest paid director and took a pay cut from £3.3m to £2.6m, and a dividend of £309,000, which was well down on the £3.4m from the previous year.

Tristan Rogers, chief executive of ConcretePlatform, which advises retailers on international expansion, said: “To hear of a brand that has previously had its fingers burnt in China deciding to re-enter, is perhaps testimony to the rapid change in consumer culture in the East, but perhaps also a firm indictment that the Western markets offer no shareholder value at present.”